FarmPolicy

February 2, 2015

Ag Economy; Policy Issues; Biotech; Immigration; and, Regulations

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “US grain silos are bulging with the most corn on record after last year’s huge harvest, adding to the drag on commodities markets suffering weakness from agriculture to oil.

“Government statisticians counted 11.2bn bushels (285m tonnes) of corn stocks in domestic storage as of December 1, up 7 per cent from a year earlier, the US Department of Agriculture said on Monday. The figure was slightly above a market expectation of 11.123bn bushels and Chicago grain futures fell.

“The US is the world’s biggest producer of corn, used in products from pig feed to ethanol fuel. A record crop of 14.2bn bushels last autumn has served to rebuild low inventories after several years of erratic weather. Ample stocks tend to damp market volatility, as consumers feel comfortable they will not run out of supply.”

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Policy Issues; Ag Economy; Immigration; Biofuels; and, Regulations

Policy Issues

Philip Brasher reported on Friday at Agri-Pulse Online that, “A top lobbyist for food and beverage giant PepsiCo Inc. who was formerly a top aide to Senate Agriculture Chairman Pat Roberts is taking over as the Agriculture Committee’s chief of staff as it prepares to rewrite federal child nutrition policy.

Joel Leftwich, a native of Wellington, Kansas, worked for Roberts, R-Kan., as deputy staff director for the committee before becoming senior director for PepsiCo’s public policy and government affairs team in March 2013.

One of the committee’s main orders of business this year will be to reauthorize the law that sets standards for school meals and the Women, Infants and Children nutrition program. The programs have a broad impact on the food and beverage industry. First lady Michelle Obama has made it a top priority to preserve higher school nutrition standards that USDA imposed under the expiring law, the Healthy, Hunger-Free Kids Act.

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ERS: Cost of corn falls relative to ethanol, boosting refiner margins

Categories: Ethanol

ers

From the U.S. Department of Agriculture’s Economic Research Service (ERS)- “Reflecting growing supplies, corn prices have been trending lower since reaching a record high season average farm price of $6.89 per bushel for the 2012/13 marketing year (September/August). Monthly average corn prices fell sharply between July 2013 and January 2014, and then declined further through 2014, reflecting a record 2014 corn crop, projected at 14.4 billion bushels. Corn prices in 2014/15 are projected at $3.50 per bushel, down 50 percent since the summer of 2013. However, throughout this period ethanol prices have remained relatively steady, averaging $2.41 per gallon. Corn is the leading feedstock for ethanol production in the United States, and ethanol represents about 40 percent of total corn use. With the price of corn declining and ethanol prices steady, ethanol producer margins have strengthened over the past 18 months. Higher margins would typically encourage greater production, but with domestic use limited to the 10 percent ethanol blend already used in most gasoline, the market can only expand through increased gasoline use or higher exports. This chart is based on data found in the U.S. Bioenergy Statistics database.”

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Ag Economy; Policy Issues; Immigration; and, Trade

Agricultural Economy

Emiko Terazono reported yesterday at The Financial Times Online that, “Global food prices fell to the lowest level in four years in 2014, as plentiful supplies of cereals, dairy products, sugar and vegetable oils pushed markets lower.

“The UN Food and Agricultural Organization said its December food price index fell more than 9 per cent from a year before. In 2014, the index averaged 202 points, down 3.7 per cent from 2013, the third consecutive yearly fall.”

The FT article pointed out that, “Dairy products faced the largest declines, thanks to a rise in exports and demand falling among some of the leading importers, such as China and Russia. Prices, which started the year at record highs, fell 34 per cent in December from a year before, helped by declines in milk powders, butter and cheese.”

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U.S. Agriculture Coalition for Cuba

From C-SPAN (Jan. 8)- Agriculture Secretary Tom Vilsack, congressional lawmakers, and food industry lobbyists announced the formation of the U.S. Agriculture Coalition for Cuba, which sought to expand food trade between the two nations.

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Policy; Immigration; Biotech; Biofuels; Ag Economy; Trade; and, Regulations

Policy Issues

Secretary of Agriculture Tom Vilsack was a guest on yesterday’s AgriTalk radio program with Mike Adams, where the conversation focused on beef checkoff issues, COOL (Country of Origin Labeling), Farm Bill implementation, and trade with Cuba (audio replay here, MP3- 11:30). An unofficial FarmPolicy.com transcript of yesterday’s discussion is available here.

On the checkoff issue, Sec. Vilsack indicated that, “Well, Mike, it was fairly obvious that the industry was not interested in having a second checkoff, and obviously the only reason we proposed it was because I believe, and I think most in the industry believe, that we need additional resources for promotion and research in the beef industry. This is an industry that faces some interesting challenges at home, and some great opportunities abroad, and there is an opportunity, I think, with increasing the checkoff and increasing investment in the checkoff, to do more research and more promotion and more marketing.

“But the industry made the decision that they were not interested in a second checkoff, and they have been unable to reach consensus on how to increase the existing checkoff, so when the writing is on the wall, you basically have to pay attention to the attitude of the folks you’re trying to serve. And it’s an unfortunate circumstance. My hope is that the industry will take an opportunity now to reach consensus, to figure out a way to strengthen the beef checkoff program.”

And in comments regarding beef imports, Sec. Vilsack pointed out that, “But if there is an equivalency determination, which is to say that the processes are equal to or better than what the U.S. does, and if it comes from an area where we’ve already done a risk assessment and find little or no risk, and that there are protections, then the science and the international rules basically say we have to open up our market opportunities, and then that allows us to go to other countries who are creating barriers to our beef products and be able to articulate and say very clearly we live by these rules and we think that—and we live by the science, and we think everyone should live by the rules and the science so that you have a much more objective system, rather than a subjective one.”

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Trade; Ag Economy; Immigration; Biofuels; and, Policy Issues

Trade Issues

Jeevan Vasagar reported yesterday at The Financial Times Online that, “A small grilled sausage from Bavaria has become the unlikely symbol of German resistance to the transatlantic trade deal being negotiated between the EU and the US, after the country’s agriculture minister warned that ‘not every sausage can be protected’ in the trade talks.

Christian Schmidt, Germany’s agriculture minister, said in an interview with Der Spiegel: ‘If we want to seize the opportunities of free trade with the enormous American market then we can’t carry on protecting every sausage and cheese speciality.’

“Food producers, politicians and campaigners against the trade deal seized on his remarks as evidence that the protection of regional brands would be sacrificed to globalisation.”

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Trade; Ag Economy; Policy Issues; and, Political Notes

Trade Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Agriculture Secretary Tom Vilsack sees trade negotiations taking up a bigger chunk of his time in 2015, particularly now that the farm bill is deep into implementation by USDA staff.

“In a year-end interview with DTN, the agriculture secretary said he believes he and other Obama administration officials will be working to complete the 12-country Asian trade deal called the Trans Pacific Partnership. The secretary seemed confident a deal could soon be struck.

“‘The hope is the Trans Pacific Partnership negotiations conclude soon in the new year so that we can go about the business of articulating the need for Trade Promotion Authority for the president,’ Vilsack said.”

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Biofuels; Trade; and, Policy Issues

Categories: Ethanol /Nutrition /Trade

Biofuels

Jacob Bunge and Jesse Newman reported in Saturday’s Wall Street Journal that, “Tumbling oil prices are bringing unwelcome tidings to one of the U.S. Farm Belt’s hottest industries.

Ethanol makers are bracing for a drop in earnings as cheap crude pushes down the prices they fetch from refiners to blend the corn-based fuel additive into gasoline. Ethanol producers also face a recent jump in the price of corn, their main raw material.

“Falling profit margins for the $40 billion U.S. ethanol industry may cause some companies to scale back production in 2015, analysts and industry executives say. Still, many observers think ethanol demand may remain steady or even rise if cheap gasoline spurs U.S. motorists to drive more, tempering the hit to ethanol earnings.”

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Biotech; Policy Issues; Ag Economy; Biofuels; and, Political Notes

Biotech

Andrew Pollack reported on the front page of the Business section in today’s New York Times that, “Its first attempt to develop genetically engineered grass ended disastrously for the Scotts Miracle-Gro Company. The grass escaped into the wild from test plots in Oregon in 2003, dooming the chances that the government would approve the product for commercial use.

“Yet Scotts is once again developing genetically modified grass that would need less mowing, be a deeper green and be resistant to damage from the popular weedkiller Roundup. But this time the grass will not need federal approval before it can be field-tested and marketed.

Scotts and several other companies are developing genetically modified crops using techniques that either are outside the jurisdiction of the Agriculture Department or use new methods — like ‘genome editing’ — that were not envisioned when the regulations were created.

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Policy Issues; Ag Economy; Trade; Biotech; and, Regulations

Policy Issues

Jenny Hopkinson, Helena Bottemiller Evich, Bill Tomson and Chase Purdy reported yesterday at Politico that, “The Obama administration is becoming increasingly involved in what Americans put on their dinner plates and in their cereal bowls, from requiring school children to be served fruit to eliminating trans fats in doughnuts. But the new Republican Congress is already laying the groundwork to push back in 2015.”

Yesterday’s article noted that, “Rep. Robert Aderholt (R-Ala.), chairman of the House Appropriations Agriculture Subcommittee, has been leading the charge on school lunch, along with Sen. John Hoeven (R-N.D.), a key member of the Senate Appropriations Agriculture Subcommittee. But their cause is about to be picked up by the House Education and Workforce Committee, chaired by Rep. John Kline (R-Minn.), and the Senate Agriculture Committee, chaired by Sen. Pat Roberts (R-Kan.), as they begin work to reauthorize the law governing school nutrition programs.

“Both Kline and Roberts have been openly critical of the 2010 Healthy Hunger-Free Kids Act, a bipartisan law that included many reforms that are now sparking complaints among schools and Republicans who argue the rules are too prescriptive and costly.”

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Biofuels; Agricultural Economy; Grocery Issues; and, Regulations

Biofuels (Cellulosic Feedstocks, Oil Prices)

Christopher Doering reported in yesterday at The Des Moines Register Online that, “Iowa made a record 3.9 billion gallons of ethanol in 2014, but output of the fuel faces uncertainty next year as the U.S. government debates the future of a controversial rule mandating the blending of ethanol in gasoline, a trade group said Monday.

“Iowa, the largest ethanol producing state, accounted for roughly 27 percent of country’s production this year. The increase in production in 2014 was the first noticeable one in years after output hovered at about 3.7 billion annually since 2011, according to Iowa Renewable Fuels Association.”

Mr. Doering noted that, “For the first time, a small amount of the ethanol production came from cellulosic feedstocks such as corn stover and corn kernel fiber. Despite falling short of cellulosic production goals in recent years, producers of the nascent fuel are starting to show signs of delivering. In 2014, Poet-DSM opened its $275 million facility in Emmetsburg. DuPont plans to open its $225 million cellulosic ethanol plant in Nevada next year.

“IRFA said the ethanol industry is facing uncertainty in Congress where some lawmakers are considering legislation that would change or repeal the Renewable Fuels Standard that requires increasingly more ethanol to be included in the country’s gasoline supply. Growth is further hindered by the inability of consumers to have access to higher blends of ethanol, such as gasoline containing 15 percent of the largely corn-based fuel, the group said.”

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Policy Issues; Drought; Trade; Immigration; Biotech; Ag Economy; and, Political Notes

Policy Issues

David Pierson reported in today’s Los Angeles Times that, “If your eggs seem a little pricier, consider the recent changes on Frank Hilliker’s ranch.

“In the last six months, the third-generation egg farmer in central San Diego County has reduced his flock by half and embarked on a $1-million overhaul of his henhouses to make them more spacious. Customers are now paying about 50% more for a dozen eggs from Hilliker’s family business at around $3 a carton.

It’s all to comply with a landmark animal welfare law that takes effect in California on New Year’s Day. Voters overwhelmingly approved Proposition 2 in 2008 to effectively abolish the close confinement of farm animals in cramped cages and crates — a practice that animal advocates say causes needless suffering and boosts the likelihood of salmonella contamination.”

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Agricultural Economy; CFTC (MF Global); Policy; and, Budget Issues

Agricultural Economy

Reuters writers Polina Devitt and Maha El Dahan reported earlier this week that, “Russia’s grain exports have stopped due to curbs brought in to protect domestic supply, putting big deals at risk, an influential farm lobby group said on Wednesday.”

The article indicated that, “Moscow imposed informal grain export controls with tougher quality monitoring and limits on railroad loadings earlier this month, as it tackles a financial crisis linked to plunging oil and Western sanctions.

“‘Since last Thursday not a single vessel, which had been due to sail under contracts, has left,’ Arkady Zlochevsky, the head of Russia’s Grain Union, the farmers lobby group, said.

“Officials also plan to impose duty on grain exports. Zlochevsky said its exact level was an unimportant detail, as he was sure it would be prohibitive.”

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Biotech; Policy Issues; and, the Agricultural Economy (Food Prices)

Biotech

Lucy Hornby reported yesterday at The Financial Times Online that, “In a speech a year ago, Xi Jinping backed China’s development of genetically modified crops as a means of strengthening food security. But even he hedged a little, warning: ‘Be bold in research, careful in promotion.’

“China’s pro-GM camp is now counting on the president’s support to unblock a bureaucratic stalemate that has stalled development of the crops by the world’s largest food consumer.

“After waves of state funding, researchers have developed a number of crops and are now just waiting for the green light to commercialise them. But approval will be slow in coming as long as public opinion — and more importantly, officialdom — remains firmly anti-GM.”

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Policy Issues; Cuba; Agricultural Economy; and, Regulations

Policy Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress wants USDA to operate like a business, but Agriculture Secretary Tom Vilsack is complaining that Congress is willing to spend $1.5 million on outside studies to duplicate work his department has already finished.

“Vilsack, in a phone interview with DTN on Thursday, expressed his frustration with some of the policy riders in the $1.1 trillion funding bill Congress approved. The policy restrictions ranged from blocking the secretary from creating a new beef checkoff to preventing the Farm Service Agency from eliminating its smallest offices nationally.

“‘I would say that it’s somewhat puzzling when Congress says ‘operate USDA like a business’ and then doesn’t give you the tools and flexibility to do so,’ the secretary said.”

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